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DIRECTIVE No

DIRECTIVE No. 26/1999/CT-TTg OF SEPTEMBER 8, 1999 ON SOLUTIONS TO REMOVE DIFFICULTIES IN ORDER TO PROMOTE INVESTMENT AND DEVELOP PRODUCTION AND EXPORT

On August 23 and 24, 1999, the Prime Minister presided over a meeting with the State Corporations to discuss measures to remove difficulties, promote investment and develop production and export.

According to reports of the Ministry of Industry, the Ministry of Planning and Investment and the Permanent Committee of the Central Commission for Renewal of Management at the Enterprises, in the past few years the rate of industrial and investment growth tended to decrease continually: 14.5% in 1996, 12.6% in 1997, 10.3% in 1998 and 10.4% in the first seven months of 1999 (only 4.3% at the enterprises under the Ministry of Industry). A similar situation has happened in the two major economic centers, namely Hanoi and Ho Chi Minh City. Production in the industrial branches are still meeting with many difficulties, especially in the sector of State enterprises; disbursement of investments from the budget and from credit investment capital has been slow. The investment and consumption demand pull measures have not been stepped up and the purchasing power tends to stall.

A number of main causes of the slowing down of the growth rate can be identified as follows: the industrial service and the investment sector continue to suffer from the impact of the financial and monetary crisis in the region and are confronted with many difficulties and challenges arising from it; the technological equipment of many factories have become obsolete, the quality of goods is inferior, labor productivity is low, production expenditures are high, hence production cost is also high. The products of the enterprises have had to compete not only with smuggled or tax evading goods and to cope with trade fraud but also to compete with goods of the foreign invested enterprises sold on the domestic market. Meanwhile, there remain many inadequacies and irrationalities in the organization of production and business of the State Corporations.

To remove the difficulties and create conditions for the enterprises to strive to accomplish their tasks of socio-economic development in 1999, the Prime Minister instructs the ministries, branches, the People�s Committees of the provinces and centrally-run cities and the State Companies and Corporations to carry out the following urgent tasks:

1. The ministries, branches and localities have the responsibility:

+ On the basis of the major solutions set forth by the Government in Resolution No. 08/1999/NQ-CP and the opinions of the ministries answering the proposals of the Corporations at the meeting on August 23 and 24, 1999, each ministry must take the initiative in coordinating with the related agencies to issue regulatory documents to remove the difficulties of the enterprises, from the mechanism and policies to the concrete tasks under their competence and create conditions for the enterprises to step up investment, production and business and develop steadily and hold on to the growth rate in order to accomplish the plan of socio-economic development in 1999 and the following years.

+ To check and ratify according to their competence the effective projects so that the Corporations may implement them according to the set plans. At the same time they must direct the disbursement so that the projects may not be stalemated.

+ To continue directing the State Corporations to improve their organization and rearrange their member units in order to accomplish the set tasks.

+ The Ministry of Finance and the State Bank shall have to study and to submit to the Prime Minister for issue the "Financial Mechanism for the State Corporations" on the principle that the State Corporations must accumulate capital for development under the inspection and supervision of the State managerial ministries and the related financial agencies.

+ The Government Office shall have to monitor and control the results of the handling of petitions and sticking points in production, business and investment at the Corporations and to report monthly the results and propose solutions to remove these difficulties and submit them to the Prime Minister for consideration and decision.

2. Responsibility of the General State Corporations:

+ The General Corporations shall have to draw up their strategies of investment for development, production and business from now up to the year 2010. In formulating their strategies, they must study the markets in the country and abroad, study the trend of development of the world and the region. The development strategies of the branches must coincide with the strategy of socio-economic development of the whole country, which is being drawn up for submission to the IXth Party Congress. The specialized management ministries must ratify the strategies; for a number, important branches of the ministries must submit them to the Prime Minister for examination and ratification. The State Corporations must raise their competitiveness against goods of foreign-invested enterprises operating in the country and goods of other countries in the region. There must be a program and plan to renew the technology of the equipment in order to raise the production capacity and the quality of products and reduce the production cost.

+ As our country is in the process of integration, the enterprises must urgently prepare the necessary conditions to take part in the integration into the World Trade Organization (WTO) and the Asian Free Trade Area (AFTA)... The State Corporations must determine their competitiveness and their capacity to fight monopoly. We must strive to achieve high quality of our products and through many forms to renew equipment, raise labor productivity, economize expenditures, reduce production cost, conduct well marketing in the country and abroad to develop production.

+ To perform the leading role in the economy, the State Corporations must do better and more effectively than the enterprises in other economic sectors (their products must be better, have a higher quality and sell at lower prices...) We must strive to achieve the standards ISO-9000, ISO-9001 and ISO-9002. This is a question of primordial importance and a vital issue in production and business, and the passport to export our products to the international market.

+ The State Corporations must study to diversify their forms of production and business, closely combine their work according to the model of production-processing-consumption which is a process of inevitable combination, of which no part can be separated from the others. We have so far built up many good models. The Ministry of Agriculture and Rural Development and the Ministry of Industry should sum up the experiences of the model of associating the factory with the raw material area, such as the model of the Lam Son sugar refinery, or the model of associating the tobacco material area with the cigarette making factory, or associating the material area of cotton with the yarn spinning factory... We should develop the experiences of these models in different branches of production, such as coffee, rubber, paper, dairy... aimed at achieving stability of production on the basis of the expansion of the more and more stable raw material areas and ensuring the benefits of the farmers.

+ There must be a program of personnel training, appointment of capable cadres to important posts of the enterprise in order to meet the new situation and tasks. At the same time, we must resolutely remove the retrograding, lazy and incapable cadres; continue arranging and equitizing the State enterprises and experimenting with the policy of selling, assigning and leasing medium and small enterprises.

3. Consuming products in stock:

At present although the scale of production of the different branches is still small, supply has already surpassed demand because the consumption of products depends on the living standard of the population. That is why, the Government has adopted the following policy:

- To pull demand through investment in capital construction, to mobilize capital in the country to ensure a higher investment than planned. The services of communication and transport, water conservancy, electricity, post and telecommunications, and oil and gas, which account for a major share in the investment in capital construction in society, must strive to over fulfil the targets set in the 1999 plan. We are not short of capital to invest in capital construction in this year, so we cannot accept that our investment plan for the effective projects, which have been approved and recorded in the plan, be broken. The Corporations must urgently and seriously revise their plans and take measures to step up the projects which are still stagnant and have not been implemented according to schedule, and supplement them with investment the projects that have completed the procedures in order to carry out them right in the remaining period of 1999.

- To pull demand through consumption: Our people are still poor, so the raising of the consumption power must be studied and carried out through diversification of the forms of sale, including the installment payment sale. The demand for investment in the rural areas has become very necessary and urgent, such as communication, hardening of irrigation works, the electric grid, schools, medical stations, housing... The service producing construction materials must study different mechanisms and policies to supply building materials to this vast market.

With a high sense of responsibility of the ministries, branches and People�s Committees of localities, with the initiative in overcoming difficulties to step up production promote investment and expand the market, we are confident that the remaining months of 1999 will see a new step forward in production, investment and export and that the State Corporations will strive to fulfill their plans for 1999 and the subsequent years.

Prime Minister

PHAN VAN KHAI